Commercial Investment Real Estate March/April 2013 | Page 21

The less-obvious case is when the big win seems to work, but backf res later. For instance, a landlord waited until lease execu- tion time to spring his gambit: He announced he would reduce the tenant improvement allowance by $20,000 from what was origi- nally agreed. No justif cation was given, but he was correct to assume that the tenant was too far into the deal to pull out. Later, he discovered that he’d mistakenly leased space holding critical electrical equipment, and the resentful tenant refused to cooperate. Keeping that $20,000 cost $150,000 for new electrical. T e small upfront price to gain trust can save expensive costs later. T e same dynamic can play out in small daily matters, because a distrustful party becomes an uncooperative party when it comes to routine property management issues. Besides the aggravation, the lack of coopera- tion can mean signif cant transactional and administrative costs to constantly deal with problems, plus the opportunity cost of time and attention not spent on other matters. Even friendly negotiations can lead to failure if the deal struck is unsustainable. If a tenant agrees to give the landlord its last penny in monthly rent, it may be stretched to the point where it has no margin of error — the f rst business setback means the tenant quits paying rent. T e landlord might have been better of with a “worse” rent deal to keep a solvent tenant who pays the rent. Repeat Customers A solid reputation means people will do business with you again and again. Con- sider long-term deals like leases, where the tenant and landlord stay intertwined in an ongoing relationship. And there are repeat players: Af er a purchaser played dirty trying to buy an industrial prop- erty in Arizona, other Arizona industrial brokers heard about it and kept listings from him. T ere is also coincidence, even among lawyers: Af er a fully negotiated lease deal fell through when the tenant bailed out just before execution, a new The close-knit nature of real estate communities makes maintaining positive relations a requirement for healthy business. tenant came along and had the very same attorney. Reputation, integrity, decency, compro- mise, and relationships: T ese aren’t just moralistic words — they’re part of the path to business success. Steven Heller, Esq., is an attorney with Gilchrist & Rutter PC, a real estate and business law fi rm based in Santa Monica, Calif. Contact him at [email protected]. WARDCENTER FOR
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